Paid-education
“More than ¾ of employees agree they should be saving more for retirement, with the top reasons for not doing so being that they cannot afford to, they have other saving priorities, such as to buy a home, or they have too much debt,” said Gerald Young, Senior Researcher, MissionSquare Research Institute.
A new report from MissionSquare Research Institute reveals that 93% of private sector employees and 89% of public sector workers with student loans consider their debt levels “problematic.” MissionSquare gathered data from its most recent survey or more than 2,000 public and private sector employees, Student Debt Impacts on Public and Private Sector Employees,
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“More than half of all survey respondents say that student debt or lack thereof was a factor in when they started saving for retirement,” said Young. “In addition, 80% of those with student debt indicate that debt has impacted their approach to investment, most commonly either focusing on short-term cash/fixed income investments or not investing at all.”
The report suggests proactive steps employers can take to address student loan issues, such as providing better information on loan forgiveness eligibility and creating incentives like matching contributions.
“Workplace discussion about student debt is uncommon,” said Young. “Among employees, only about 20% say it comes up frequently among their coworkers, with 30% saying it is too personal a topic.
“The federal government’s Public Sector Loan Forgiveness [PSLF] program offers student debt relief to those who work in the public sector and make regular debt payments for 10 years,” said Young. “However, since the qualification process can be complex, providing accurate and up-to-date information to employees is important in helping them navigate the program.
“Among public sector respondents to the student debt survey, only 29% said their employer has ever offered information on PSLF. Incorporating such topics into a larger financial education program could help employers point their staff to the full array of benefits available to them.”
Employers should take action directly to help address the student debt issue, recommends MissionSquare. “Wherever employers are authorized by federal or state law to offer incentives to their employees, they should consider them as part of their overall compensation, recruitment, and retention strategies,” said Young. “This includes matching contributions under SECURE 2.0, but also auto-enrollment features, both of which may help employees build a lifelong savings habit.”
“Regarding education-linked matching programs specifically, 78% of employees said they would be very or somewhat likely to participate in such a program if offered.
Related: 401(k) matching, loans, auto-enrollment: Options to incentivize workers to save more
“Even where such formal incentives are not currently an option, employers may want to consider financial education programs for their staff. As demonstrated in the Research Institute’s recent survey on Public Service Employees’ Financial and Retirement Security, as employees continue to cite a desire for more information about how their benefits work, how much they need to save for retirement, or other financial management topics.”
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
